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Regulation and Compliance > Federal Regulation > SEC

NASAA, SEC Sign Crowdfunding Agreement as Rules Kick In

By Melanie Waddell

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The North American Securities Administrators Association and the Securities and Exchange Commission signed Friday a memorandum of understanding to share information as new rules to facilitate intrastate crowdfunding offerings and regional offerings kick in.

The MOU, signed by SEC acting Chairman Michael Piwowar and Mike Rothman, Minnesota commissioner of commerce and president of NASAA, will allow federal and state securities regulators to monitor the effects of the new rules and also guard against fraud.

New JOBS Act rules went into effect in 2015 and 2016. New amendments to facilitate regional offerings took hold in January and amendments to provide more flexibility for intrastate crowdfunding offerings will go into effect in April.

The SEC in October adopted new and amended rules to update and modernize companies’ ability to raise money from investors through intrastate and small offerings.

The final rules adopted by the SEC in October are designed to further facilitate access to capital in cross-state and regional securities offerings.

“The agreement not only builds on an already productive relationship between the SEC and state regulators, it also offers additional insights and protections as we help companies grow and create jobs while providing new opportunities to investors,” said Piwowar.

Rothman added that the agreement will “strengthen collaboration among state and federal securities regulators to help expand small-business investment opportunities while also protecting investors. Ongoing dialogue is essential to carry out our responsibilities going forward. With this MOU in place, we have an opportunity to share information that will bolster our efforts to support small-business capital formation and prevent fraud.”

Under the new rules, companies will have more flexibility to engage in intrastate offers through websites and social media without having to register their offering with the federal government, NASAA states.

Companies now can also raise up to $5 million per year through other amended rules, which could facilitate the development of regional offering exemptions at the state level to permit companies to raise from investors in a specific region. The previous limit was $1 million.

— Check out Crowdfunding and Peer Lending: Time to Swim With the Sharks? on ThinkAdvisor.

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